Kuala lumpur: S and P Global Ratings has updated its 2026 gross domestic product (GDP) growth forecast for the Asia-Pacific region, increasing it from 4.0 percent to 4.3 percent, while Malaysia’s GDP is now expected to grow at 4.5 percent.
According to BERNAMA News Agency, the revised forecasts were detailed in the Economic Outlook Asia-Pacific First Quarter 2026: Signs of Relief report. The credit rating agency attributed the improved projections to resilient demand, stronger technology exports, and reduced tariff uncertainty. The agency noted that improved US-China relations and robust domestic demand in many economies are expected to support the region’s economic growth in 2026.
The report’s tables indicated that Malaysia’s GDP growth forecast for 2026 has been adjusted upwards by 0.2 percentage points to 4.5 percent, with consumer inflation projected at 1.9 percent and the policy rate steady at 2.75 percent. Meanwhile, China’s 2026 GDP forecast has been increased to 4.4 percent from an earlier estimate of 4.0 percent, credited to a reduction in US tariffs and economic resilience noted in the third quarter of 2025.
For Asia excluding China, both exports and domestic demand showed resilience through the third quarter of 2025, driven by strong technology product exports like semiconductors. Although S and P anticipates a regional slowdown in 2026 due to US tariffs, it has adjusted its export forecasts upwards, citing an improved outlook for tech exports and positive US-China negotiations.
S and P highlighted ongoing uncertainty surrounding US tariffs in 2026, partly due to indications that the US administration may use tariffs for political reasons, despite improved visibility. It also noted that Asia-Pacific central banks have reduced policy rates by an average of 65 basis points in 2025, following a 40 basis point reduction in 2024, with limited scope for further cuts.
The report concluded that inflation is not currently a major concern in the Asia-Pacific region, with consumer inflation expected to remain low amid moderate energy prices and a shift in exports away from the US. Additionally, Asia-Pacific currencies are projected to strengthen slightly against the US dollar by the end of 2026.